[Federal Register Volume 78, Number 74 (Wednesday, April 17, 2013)]
[Rules and Regulations]
[Pages 22767-22770]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08086]
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Rules and Regulations
Federal Register
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This section of the FEDERAL REGISTER contains regulatory documents
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Federal Register / Vol. 78, No. 74 / Wednesday, April 17, 2013 /
Rules and Regulations
[[Page 22767]]
NATIONAL CREDIT UNION ADMINISTRATION
5 CFR Part 9601
RIN 3133-AE10
Supplemental Standards of Ethical Conduct for Employees of the
National Credit Union Administration
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
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SUMMARY: The National Credit Union Administration, with the concurrence
of the Office of Government Ethics (OGE), is issuing this final rule
for employees of the NCUA that supplements the Standards of Ethical
Conduct for Employees of the Executive Branch (Standards) issued by
OGE. The rule prohibits credit union-related employment and requires
NCUA employees to obtain approval before engaging in other types of
outside employment or activities.
DATES: This final rule is effective April 17, 2013.
FOR FURTHER INFORMATION CONTACT: Hattie Ulan, National Credit Union
Administration, Alternate Agency Ethics Official, Office of General
Counsel, 1775 Duke Street, Alexandria, VA 22314 or telephone (703-518-
6540).
SUPPLEMENTARY INFORMATION:
I. Background
II. Discussion of Amendments
III. Direct Final Rule
IV. Regulatory Procedures
I. Background
Why is NCUA issuing this rule?
On August 7, 1992, OGE published the Standards, which became
effective on February 3, 1993. See 57 FR 35006-35067, as corrected at
57 FR 48557, 57 FR 52483, and 60 FR 51167, with additional grace period
extensions for certain existing provisions at 59 FR 4779-4780, 60 FR
6390-6391, and 60 FR 66857-66858. The Standards, as corrected and
amended, are codified in 5 CFR part 2635. The Standards set uniform
ethical conduct standards applicable to all executive branch personnel
(including NCUA employees).
Section 2635.105 of the Standards authorizes an agency, with the
concurrence of OGE, to publish agency-specific supplemental regulations
that are necessary to properly implement its respective ethics program.
To date, the NCUA Board (Board) has not published any agency-specific
ethics regulations pursuant to Section 2635.105.\1\ Section 2635.802 of
the OGE Standards prohibits employees from engaging in outside
employment or activities that conflict with official duties. Section
2635.803 of the OGE Standards authorizes the Board to issue a
supplemental regulation requiring employees to obtain its prior
approval before engaging in outside employment or activities where the
Board has determined it necessary or desirable for the purpose of
administering its ethics program. Such a supplemental regulation may
apply to all employees or a category of employees. Id. Most, if not
all, of the other financial regulatory agencies have issued
supplemental regulations. In most of the agencies' regulations
reviewed, employees are prohibited from working for regulated
institutions and affiliates, and employees must get approval for
certain outside employment and activities due to the nature of the
agencies' work and the potential for conflict of interest.
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\1\ Certain senior NCUA examiners are subject to post-employment
restrictions found in Part 796 of the NCUA Regulations, 12 CFR part
796. Part 796 was issued pursuant to a provision of the Federal
Credit Union (FCU) Act, rather than pursuant to the ethics
regulations. See Section 206(w) of the FCU Act, 12 U.S.C. 1786(w).
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Why is this rule necessary?
In the recent past there have been cases where NCUA employees have
participated in outside employment/activities without such consultation
and the employment/activity has resulted in either an appearance of or
an actual conflict of interest. For example, an NCUA examiner could not
serve as a volunteer director of a credit union as this would present
an appearance of a conflict of interest as well as other potential
violations of the Standards. Neither could an NCUA examiner serve as a
paid part-time manager of a credit union for the same reasons. The
Board has now determined that a supplemental regulation will be
necessary and useful in avoiding potential conflicts of interest. The
rule contains a general provision referring to the Standards and
additional ethics provisions that prohibit employment in credit unions
and related entities and requires approval for other outside employment
and activities. The Board, with OGE's concurrence, has determined that
the following supplemental rule is necessary for successful
implementation of its ethics program in light of NCUA's unique programs
and operations.
Where is the new rule found?
All supplemental agency ethics regulations are found in part 5 of
the Code of Federal Regulations, following the OGE Regulations.\2\ NCUA
has been assigned 5 CFR part 9601 for its supplemental ethics
regulation.
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\2\ All other NCUA-specific regulations are found in 12 CFR
chapter VII.
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II. Discussion of Amendments
Section 9601.101 General
What does the general provision contain?
Paragraph (a) explains that the regulation applies to NCUA
employees, other than special government employees,\3\ and supplements
the OGE Standards. Paragraph (b) notes that employees must comply with
ethics guidance and procedures issued by NCUA. This paragraph also
includes cross-references to other OGE ethics related regulations
including the regulations concerning Executive Branch financial
disclosure, financial interests, and post-employment, and to the NCUA
specific regulation regarding post-employment restrictions applicable
to senior examiners spending a specific amount of time in a particular
credit union. See footnote 1. In addition, this paragraph notes that
employees should contact an NCUA ethics official if an ethics question
arises.
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\3\ Special government employees are defined in the Standards at
5 CFR 2635.102(l) as employees to perform temporary duties for a
period not to exceed 130 days during any consecutive 365-day period.
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[[Page 22768]]
Section 9601.102 Definitions
How is employment defined?
Paragraph (a)(1) broadly defines ``employment'' to include any form
of non-Federal employment or business relationship involving the
provision of personal services other than in the discharge of official
duties, regardless of whether the services are compensated. In addition
to more typical second jobs, employment includes outside teaching,
speaking or writing when the writing is done under an arrangement with
another person or for the publication of a written product. Employees
who operate their own businesses are subject to the approval
requirement. Paragraph (a)(2) excludes from the definition of
employment non-compensated participation in the activities of certain
nonprofit organizations. Employees are not required to seek approval if
working for the type of organization described in paragraph (a)(2)
unless: (1) The employee will receive compensation other than
reimbursement of expenses; or (2) the organization's activities
substantially relate to the employee's official duties. If either of
the above two criteria are met, employees must request and obtain
approval before engaging in outside employment for the organization.
How are credit union-related entities defined?
For purposes of this rule, a credit union includes both insured and
noninsured credit unions as defined in section 102(7) of the Federal
Credit Union Act, 12 U.S.C. 1752(7), and a credit union service
organization (CUSO) as defined in section 741.222(a) of the NCUA
Regulations, 12 CFR 741.222. A credit union trade group is a trade
organization whose membership is comprised of credit unions, CUSOs,
state credit union regulators, state credit union organizations, and
employees and officials of such organizations. Other credit union-
related entities may be specified in Instructions issued by the
Designated Agency Ethics Official (DAEO) pursuant to section 104.
Section 9601.103 Prohibited Employment
Why is an outright prohibition necessary?
Most of the financial regulatory agencies' supplemental ethics
regulations contain an outright prohibition against their employees
working for their own regulated entities as well as affiliated
entities, in any capacity. See, e.g., FDIC Supplemental Standards at 5
CFR 3201.107(a). The Board believes that an outright prohibition
against NCUA employees, other than special government employees,
working for credit unions, CUSOs, credit union trade groups, and
related entities is appropriate and necessary because such employment
or other service would either involve a direct conflict of interest or
the appearance of a conflict of interest.
Section 9601.104 Prior Approval for Outside Employment
When is approval required?
Paragraph (a)(1) requires prior approval before an employee, other
than a special government employee, engages in non-prohibited outside
employment, with or without compensation. Employees must obtain the
approval of their immediate supervisor with the concurrence of the
Designated Agency Ethics Official (DAEO). Paragraph (a)(2) includes an
approval requirement for outside employment that predates the effective
date of this regulation. It also requires that new NCUA employees,
other than special government employees, either terminate such
employment or activities if prohibited by section 103 or get approval
of continuing outside employment or activities pursuant to the rule.
How is the request for approval submitted and what information must it
contain?
Paragraph (b) requires that the employee, other than a special
government employee, submit an email or other form of written
correspondence to his or her supervisor to request approval. The
employee must submit the name of his or her outside employer, the title
of the outside position, the nature of the work to be performed, and
the estimated duration of the outside employment. The employee may
provide additional information addressing any potential conflicts of
interest. This paragraph also requires that if there is a significant
change in either outside employment or in the employee's official
position at NCUA, the employee must submit a revised request for
approval.
What standard will be applied to requests for approval?
Paragraph (c) states that approval shall be granted only upon a
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635. This involves a conflict of interest analysis (including
appearance issues) as well as a review of the additional prohibitions
in the Standards addressing outside employment. See 5 CFR 2635.801 et
seq. For example, the Standards address service as an expert witness,
limit the outside income of noncareer employees, and impose limitations
on teaching, speaking and writing. See 5 CFR 2635.804, 805 and 807.
There are also provisions in the United States criminal code addressing
special approval for certain representational activities. See 18 U.S.C.
203(d) and 205(e). These provisions are addressed in a note to the
rule. The requirement for the DAEO's concurrence with the supervisor's
approval will assure that all provisions of the ethics laws are
addressed in the approval process.
Section 9601.105 DAEO Responsibilities
What are the DAEO's responsibilities under this new rule?
Pursuant to delegated authority, the DAEO will issue an Instruction
setting forth specific procedures to be followed concerning this new
regulation prior to its effective date. As noted above, the effective
date is the date of publication in the Federal Register. Future
Instructions may exempt categories of employment from prior approval as
well as set forth examples of outside employment that are permissible
or impermissible under the rule, including examples of organizations or
entities similar to credit unions, credit union trade groups, and
credit union service organizations (other credit union-related
entities).
III. Direct Final Rule
Pursuant to the Administrative Procedure Act, 5 U.S.C. 553, notice
and public comment are not required because this rule concerns matters
of agency organization, practice and procedure. In addition, the Board
finds good cause exists for waiving the general notice of proposed
rulemaking and opportunity for public comment because the rule
primarily affects agency employees. The Board is issuing this rule as a
final rule that is effective upon publication. See 5 U.S.C. 553(a)(2),
(b)(3)(A) and (B), and (d)(3).
IV. Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires NCUA to prepare an analysis
to describe any significant economic impact a rule may have on a
substantial number of small credit unions, defined as those under ten
million dollars. This interim final rule will not have a significant
economic impact on a
[[Page 22769]]
substantial number of small credit unions as it primarily affects NCUA
employees.
Paperwork Reduction Act
NCUA has determined that the final rule will not increase paperwork
requirements under the Paperwork Reduction Act of 1995 and regulations
of the Office of Management and Budget. 44 U.S.C. 3501 et seq.; 5 CFR
part 1320.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. In
adherence with fundamental federalism principles, NCUA, an independent
regulatory agency as defined in 44 U.S.C. 5302(5), voluntarily complies
with the executive order. The final rule will not have substantial
direct effects on the states, on the connection between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. NCUA has
determined that this rule does not constitute a policy that has
federalism implications for purposes of the executive order.
The Treasury and General Government Appropriations Act, 1999--
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that this final rule will not affect family
well-being within the meaning of section 654 of the Treasury and
General Government Appropriations Act, 1999, Public Law 105-277, 112
Stat. 2681 (1998).
Small Business Regulatory Enforcement Fairness Act
The Small Business Regulatory Enforcement Fairness Act of 1996,
Public Law 104-212 (SBREFA)), provides generally for congressional
review of agency rules. A reporting requirement is triggered in
instances where NCUA issues a final rule as defined by Section 551 of
the APA. 5 U.S.C. 551. NCUA has requested a SBREFA determination from
the Office of Management and Budget, which is pending. As required by
SBREFA, NCUA will file the appropriate reports with Congress and the
General Accountability Office so that the rule may be reviewed.
List of Subjects in 5 CFR Part 9601
Conflict of interests, Government employees.
Dated: February 21, 2013.
Mary Rupp,
Secretary of the Board.
Approved: April 1, 2013.
Walter M. Shaub, Jr.
Director, Office of Government Ethics.
Accordingly, for the reasons set forth in the preamble, the
National Credit Union Administration Board, with the concurrence of the
Office of Government Ethics, is amending title 5 of the Code of Federal
Regulations by adding a new chapter LXXXVI, consisting of part 9601, to
read as follows:
TITLE 5--Administrative Personnel
CHAPTER LXXXVI--NATIONAL CREDIT UNION ADMINISTRATION
PART 9601--SUPPLEMENTAL STANDARDS OF ETHICAL CONDUCT FOR EMPLOYEES
OF THE NATIONAL CREDIT UNION ADMINISTRATION
Sec.
9601.101 General.
9601.102 Definitions.
9601.103 Prohibited outside employment.
9601.104 Prior approval for outside employment.
9601.105 DAEO's responsibilities.
Authority: 12 U.S.C. 1752a(d), 1766; 5 U.S.C. 7301; 5 U.S.C.
App. (Ethics in Government Act of 1978); E.O. 12674, 54 FR 15159 3
CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3
CFR, 1990 Comp., p. 306; 5 CFR 2635.105, 5 CFR 2635.403, 5 CFR
2635.502 and 5 CFR 2635.803
Sec. 9601.101 General
(a) Purpose. In accordance with 5 CFR 2635.105, the regulations in
this part apply to employees of the National Credit Union
Administration (NCUA), other than special government employees as
defined in 5 CFR 2635.102(l) and supplement the Standards of Ethical
Conduct for Employees of the Executive Branch contained in 5 CFR part
2635 (Office of Government Ethics (OGE) Standards).
(b) Other regulations, guidance and procedures. In addition to 5
CFR part 2635 and this part, NCUA employees are required to comply with
implementing guidance and procedures issued by the NCUA in accordance
with 5 CFR 2635.105(c). NCUA employees are also subject to other
government-wide ethics regulations including, but not limited to:
Regulations concerning financial disclosure contained in 5 CFR part
2634, regulations concerning executive branch financial interests and
conflicts contained in 5 CFR part 2640, and regulations concerning
post-employment restrictions contained in 5 CFR part 2641. Certain
senior NCUA examiners are also subject to post-employment restrictions
contained in NCUA's Regulation found at 12 CFR part 796. Employees
should contact an NCUA ethics official if they have questions about any
provision of this regulation or other ethics-related matters.
Sec. 9601.102 Definitions.
The following definitions apply to this part:
(a) Employment.
(1) For purposes of this section, ``employment'' means any form of
non-Federal employment, business relationship, or activity involving
the provision of personal services by the employee, whether or not for
compensation. It includes, but is not limited to, services as an
officer, director, employee, agent, advisor, attorney, consultant,
contractor, general partner, trustee, teacher, or speaker. It includes
a writing when done under an arrangement with another person for
production or publication of the written product.
(2) The definition of employment does not include participation in
the activities of a nonprofit charitable, religious, professional,
social, fraternal, educational, recreational, public service or civic
organization, unless:
(i) The employee will receive compensation other than reimbursement
of expenses; or
(ii) The organization's activities are devoted substantially to
matters relating to the employee's official duties as defined in 5 CFR
2635.807(a)(2)(i)(B) through (E).
Note to paragraph (a): There is a special approval requirement set
out in both 18 U.S.C. 203(d) and 205(e), respectively, for certain
representational activities otherwise covered by the conflict of
interest restrictions on compensation and activities of employees in
claims against and other matters affecting the Government. Thus, an
employee who wishes to act as agent or attorney for, or otherwise
represent his parents, spouse, child, or any person for whom, or any
estate for which, he is serving as guardian, executor, administrator,
trustee, or other personal fiduciary in such matters must obtain the
approval required by law of the Government official responsible for the
employee's appointment in addition to the regulatory approval of this
section.
(b) Credit union-related entities.
(1) Credit union includes insured and non-insured credit unions as
defined in Section 102(7) of the Federal Credit Union Act (the Act), 12
U.S.C. 1752(7).
[[Page 22770]]
(2) Credit union service organization as defined in Sec.
741.222(a) of the NCUA Regulations, 12 CFR 741.222(a).
(3) Credit union trade groups include credit union trade
organizations whose membership is comprised of credit union, CUSO,
state credit union regulators, state credit union organizations, and
officials and employees of such organizations.
(4) Other credit union-related entities may be defined pursuant to
Agency Instruction.
Sec. 9601.103 Prohibited outside employment.
No employee may engage in outside employment, with or without
compensation, with any credit union, credit union trade group, credit
union service organization, or other credit union-related entity, in
any capacity.
Sec. 9601.104 Prior approval for outside employment.
(a) General requirement.
(1) Before engaging in any outside employment, with or without
compensation, other than prohibited employment in section 103 of the
Act, an NCUA employee, other than a special government employee, must
obtain written approval from the employee's supervisor and the
concurrence of the Designated Agency Ethics Official (DAEO), except to
the extent that the DAEO has issued an instruction pursuant to section
105 of the Act exempting an activity or class of activities from this
requirement.
(2) Any employee, other than a special government employee, who,
before the effective date of this part or commencement of employment
with NCUA, began engaging in outside employment must, within 30
calendar days of the effective date of this part or 30 days of
commencement of employment with NCUA, either terminate such employment
if it is in violation of section 103 of the Act or request written
approval from his or her supervisor and the concurrence of the DAEO in
accordance with this section. The employee may continue engaging in the
outside employment while the request for approval is under review.
(b) Procedure for requesting approval.
(1) Employees shall request the approval required by paragraph (a)
of this section by email or other form of written correspondence in
advance of engaging in outside employment as defined in section 102 of
the Act. The employee requesting approval shall submit the request to
his/her supervisor.
(2) The request for approval to engage in outside employment shall
set forth, at a minimum:
(i) The name of the employer or organization;
(ii) The nature of the activity or other work to be performed;
(iii) The title of the position; and
(iv) The estimated duration of the outside employment.
(3) Upon a significant change in the nature or scope of the outside
employment or in the employee's official position with the NCUA, the
employee must, within 7 calendar days of the change, submit a revised
request for approval.
(c) Standard for approval. Approval shall be granted only upon a
determination that the outside employment is not expected to involve
conduct prohibited by statute or Federal regulation, including 5 CFR
part 2635.
Sec. 9601.105 DAEO's responsibilities.
The NCUA DAEO may issue Instructions governing the submission of
requests for approval of outside employment. The Instructions may
exempt categories of employment from prior approval requirement of this
section based on a determination that employment within those
categories of employment would generally be approved and is not likely
to involve conduct prohibited by statute or Federal regulation,
including 5 CFR part 2635. The DAEO may include in these Instructions
examples of outside employment that are permissible or impermissible
consistent with this part and 5 CFR part 2635, including examples of
other credit union-related entities.
[FR Doc. 2013-08086 Filed 4-16-13; 8:45 am]
BILLING CODE 7535-01-P